2018 (9) TMI 1647 – APPELLATE AUTHORITY FOR ADVANCE RULING, UTTARAKHAND – 2018 (18) G. S. T. L. 566 (App. A. A. R. – GST) – Levy of GST – Marg Sudharan Shulk – charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of forest road – Abhivahan Shulk – charged and collected by applicant in respect of forest produce carried out by a person – Challenge to Advance Ruling decision.
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Whether GST is leviable on the “Marg Sudharan Shulk” and “Abhivahan ShuIk” said to be charged by Forest Division Dehradun from the non government, private and commercial vehicles engaged in mining work in lieu of use of forest road?
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Held that:- A fee is charged in lieu of some service granted to a particular class of persons from whom it is being charged. Such fees are to offset the expenses (partly or fully) incurred in rendering the said service and co-relation between the two with exact mathema
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orest area without any forest produce. Thus, this fee is directly related to the quality and quantity of the forest produce.
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Abhivahan Shulk fulfills all the criteria, which are required to be established for a government levy, for it to be termed as ‘fee’. The very nature of it being a fee ensures that a quid pro quo has to be there and therefore rendering of some form of service comes in built, which is also established as discussed above. Thus, this shulk collected against the services rendered, is liable to be taxed under the provisions of Goods and Service Tax Acts, unless otherwise exempted – Sub-clause (2) is the exclusion clause and only goods or service falling under the Schedule III (clause a) or being included in any exception notification (clause b), will not be treated as supply of goods or supply of services. Everything and anything other than those covered by sub clause (2) (a) & (b) are to be treated as supply of goods or supply of services as covered by Schedule
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F FACTS OF THE CASE 1. In the instant case, an application under Sub-Section (1) of Section 97 of the CGST Act and the rules made thereunder, was filed by Regional Forest Officer (Forest Division, Dehradun) seeking an advance ruling on the question whether GST is leviable on the Marg Sudharan Shulk and Abhivahan ShuIk said to be charged by Forest Division Dehradun from the non government, private and commercial vehicles engaged in mining work in lieu of use of forest road. The said mining is being undertaken at Saung and Jakhan Rivers falling under the jurisdiction of Forest Division Dehradun under the supervision of Van Vikas Nigam after getting necessary approval from Environment Ministry, Government of India. 1.2. After having gone through the merits of the applicability of GST on Marg Sudharan Shulk , which was being charged and collected by applicant for the maintenance of forest road, from non government, private and commercial vehicles engaged in mining work in lieu of use of fo
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rmined according to quality and quantity. Therefore, said Abhivahan Shulk cannot be termed as toll tax and rather is a form of consideration received by the applicant in lieu of services provided to the person for carrying forest produce. Under Section 2(102) of GST Act, services means anything other than goods. …..and all services but for list of exempted services as provided under Chapter 99 of GST Tariff, 2017 are liable for GST. Since the services provided by the applicant did not find mention in the list of exempted services, therefore the applicant was liable to pay GST @ 18% on the said Abhivahan Shulk under Service Code 9997 and was to be treated as other services CASE FOR THE PARTY Aggrieved by the said order passed by the Authority for Advance Ruling vide Order No.01/2018-19 dated 20.04.2018 = 2018 (6) TMI 430 – AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND, the party vide the instant Appeal dated 25.05.2018 (admitted on 18.06.2018) have defended their stance of the non-leviab
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ch timber or other produce without a pass from an officer duly authorised to issue the same, or otherwise than in accordance with the conditions of such pass; further clause (c) prescribes that State Govt. may provide for the issue, production and return of such passes and for the payment of fees therefore 4. That THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES 2012, have been formulated to implement the provisions of Indian Forest Act 1927 and Chapter II of the said Rules deal with Transit of Timber and other Forest Produce by Land and Rule 3 which pertains to Regulation of Transit of Forest Produce by Means of Permit , provides that No forest produce shall be moved into, or from, or within the State of Uttarakhand except as hereinafter provided, without a transit pass in the form Schedule A to these rules…… .Further Rule 5 which deals with Fee Payable for Different classes of Passes prescribes the system of issuance of passes and fee payable for the same. 5. Thus
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this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration; and (d) the activities to be treated as supply of goods or supply or services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1)- (a) activities or transactions specified in Schedule Ill; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of
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in the definition of service. 8. That in terms of the submissions made, the Abhivahan Shulk (Transit Fee) is not exigible to GST and in case such fee is held to be exigible to GST, in such a scenario all Govt. Fees and Levies charged under their specific statues shall become exigible to GST, which is not the intention of legislature, therefore it was prayed that Abhivahan Shulk (Transit Fee) may not be considered exigible to GST. That without prejudice to the submissions made hereinabove, it was further pleaded that if it was deemed that the Abhivahan Shulk (Transit Fee) charged by the appellant is for rendering service and is exigible to GST, the provisions of Notification No. 13/2017-CT(R) dated 28.06.2017 shall continue to apply and in terms of entry S.No. 5, GST, if any applicable, on the said Abhivahan Shulk (Transit Fee), shall be payable by the recipient of service under Reverse Charge and not appellant as held by the Authority for Advance Ruling by orders dated 20.04.2018, sinc
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ollection of the Abhivahan Shulk (Transit Fee). Ans 1. The said Abhivahan Shulk is collected under the authority granted in terms of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES 2012, which have been formulated to implement the provisions of Indian Forest Act 1927. A copy of the same has already been submitted during the course of personal hearing. Q2. Since when this fee is collected and what is the point of collection? What is the machinery for collection? Ans 2. This fee is collected since 1978 in terms of earlier UP Transit of Timber and Other Forest Produce Rules 1978. The fee is collected at various check posts established by the appellant and the said fee is collected by the officers of the appellant. Q3. Is there any exemption from fee? If so, please provide the details and reason for exemption. Ans 3. That exemption from fee is granted in terms of Rule 3 of THE UTTARAKHAND TRANSIT OF TIMBER AND OTHER FOREST PRODUCE RULES 2012 in the following circumstances:
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ring. Q5. Under what accounting head is the fee deposited? Ans 5. The Fee is Deposited with State Govt. as Govt. Revenue under Code – 0406- 01- 800- 01- 03. A copy of sample challan is enclosed herewith as Annexure-I. Q6. What is the reason for imposition of this fee? How is the gross collection used and by which authority? Ans 6. The fee is charged in terms of the authorities granted under the Indian Forest Act 1927, which has been enacted to consolidate the law relating to forests, the transit of forest-produce and the duty leviable on timber and other forest-produce . Further to ensure that no unwarranted forest produce is taken out. The Gross Collection of Abhivahan Shulk is deposited with State Govt. as Govt. Revenue. A sample copy of challan is already enclosed as Annexure-I. Further the said collected sums are utilised by State Govt. the way Govt Revenue is utilised. Q7. Is any annual target fixed for collection of this fee? If yes, copy of latest correspondence may please be su
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case less than ₹ 10000/- or with both. Q10. Are the forest produce liable to seizure in case the Abhivahan Shulk is not paid? What is the fate of seized goods? Are they subsequently auctioned then is the Abhivahan Shulk recouped from the sales proceeds? Ans 10.Yes. That once the produce is detained, the case is placed before the Civil Court and once the orders are passed for seizure of the same, the said produce is auctioned for recovery of fine. Q11. Sample copy of receipt / challan for this fee. Ans 11. Sample Copy of receipts and Challan towards deposition of the same towards Govt. Revenue are Enclosed herewith as Annexure-2 Q 12. Where the fee is deposited whether with treasury or any department? Ans 12. The Gross Collection of Abhivahan Shulk is deposited with State Govt. as Govt. Revenue. A sample copy of challan is already enclosed as Annexure- I DISCUSSIONS & FINDINGS We have carefully gone through the order of the Authority on Advance Ruling dated 20.04.2018, appeal
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cation no. 12/2017 CT(R) dated 28.06.2017 Before going into the specific details of the issue, the nature of the levy needs to be understood. Hon ble Supreme Court, in the landmark judgement in the case of State of Rajasthan vs. Sajjan Lal, AIR 1975 (Supreme Court) page 706, (Para 40 and 41) = 1973 (12) TMI 93 – SUPREME COURT OF INDIA, laid down the law regarding the difference between a tax and fee. It was held (relevant part quoted herein) – Section 17(3) cannot be held to be invalid and ultra vires the power, of the State Legislature. The mere fact that the amount was paid into the consolidated fund is by itself not sufficient to hold that the levy under s. 17(3) of the Act is a tax. It was held in the Commissioner of H.R.E. Madras v. Sri Lakshmindra Tirtha Swamiar of Shri Shirur Mutt = 1954 (4) TMI 29 – SUPREME COURT that the essence of taxation is compulsion and imposition made for public purpose without reference to any special benefit to be conferred on the payer of the tax, tha
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down by this Court of the distinction between the tax and the fee and its demarcating line visa-vis the power of the legislation to make law for imposition of fee in that behalf. Suffice to reiterate the ratio laid in Sreenivasa General Traders and Ors. v. State of A.P. and Ors. 1983 (9) TMI 315 – SUPREME COURT, that the traditional view that there must be actual quid pro quo for a fee has undergone a sea change. The distinction between a tax and a fee lies primarily in the fact that a tax is levied as part of a common burden, while a fee is for payment of a specific benefit or privilege although the special advantage is secondary to the primary purpose of regulation in public interest, if the element of revenue for general purpose of the State predominates the levy becomes a tax. In regard to fee, there is, and must always be, correlation between the fee collected and the service intended to be rendered. In determining whether a levy is a fee, the true test must be whether its primary
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in it, nor is it a postulate of a fee that it must have direct relation to the actual service rendered by the authority to each individual nor that each should obtain the benefit of the service. Further, in the case of P. Kannadsan etc. vs. State of Tamilnadu & other etc. J.T. 1996 (7) SC 16 = 1996 (7) TMI 554 – SUPREME COURT OF INDIA. It has been observed that : Even in the matter of fees, it is not necessary that element of quid pro quo should be established in each and every cases for it is well-settled that fees can be both regulatory and compensatory and that in the case of regulatory fees the element of quid pro quo is totally irrelevant. Thus, from the above pronouncements, it is crystal clear that a fee is charged in lieu of some service granted to a particular class of persons from whom it is being charged. Such fees are to offset the expenses (partly or fully) incurred in rendering the said service and co-relation between the two with exact mathematical precision is not i
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est produce. Thus, this fee is directly related to the quality and quantity of the forest produce. The Uttarakhand Forest Department is incurring expenses in maintaining the administrative machinery for collection of the Abhivahan Shulk and they are required, by the Uttarakhand Transit of Timber and Other Forest Produce Rules 2012, to construct and maintain depots. All these expenses appear to be met up from the collection in the form of Abhivahan Shulk and the fact that this fee is deposited in the consolidated general head does not in any way change its character of being a fee. In return for this fee, the forest department is providing the service of maintaining and regulating the forest produce and ensuring the continued availability of the forest produce and its safe transit through the jurisdiction of forest department. These services are restricted only to the persons who are carrying the forest produce and have paid the Abhivahan Shulk. Thus, only a particular class of people,
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ney or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; . Thus, by using the word anything the legislation becomes all encompassing with the only exceptions contained in the definition itself. It is not possible to include everything in a definition. So, merely the fact that the term Govt. fee is not mentioned in the definition of services does not exclude it. The important factor is whether it falls under other than goods, money and securities and the answer has to be obviously in negative. So, government fees undoubtedly are covered by the definition of services. Further, the appellant have taken the plea that Abhivahan Shulk is not being charged for furtherance of business and hence it does not fall under the ambit of supply as defined in clause (a) or (b) of Section 7 sub-section (1) of the CGST Act 2017. However, we find that the remaining clauses and sub-s
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notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. (3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. A plain reading of the above statute clearly shows that sub-clause (2) is the exclusion clause and only goods or service falling under the Schedule III (clause a) or being included in any exception notification (clause b), will not be treated as supply of goods or supply of services. Everything and anything other than those covered by sub clause (2) (a) & (b) are to be treated as supply of goods or supply of services as covered by Schedule I or Schedule II in terms of sub-clause (1)(c) and (1)(d) respectively. Government fees are not specified in Sc
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llip;…… (b)…….. (c)………(d) any service, other than services covered under entries (a) to (c) above, provided to business entities are to be taxed at NIL rates. Abhivahan Shulk does not fall under exclusion clauses (a) to (c) and hence they are to be treated as any service provided to a business entity, as per clause (d) and accordingly the fee does not fall under the category of NIL rate. The Heading number 9997 at entry serial no. 35 of Notification no. 11/2017-Central Tax (Rate) dated 28.06.2017 reads – Other services (washing, cleaning and dyeing services; beauty and physical well-being services: and other miscellaneous services including services nowhere else classified) with the CGST rate of 9% [The corresponding entry in notification no. 08/2017-lntegrated Tax (Rates) dated 28.06.2017 having IGST rate of 18%]. This entry serial is the residuary entry which covers all other services which are not elsewhere specified. As discussed above, t
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